In each of the following questions, two statements numbered I and II are…

2025

In each of the following questions, two statements numbered I and II are given. There may be cause and effect relationship between the two statements. These two statements may be the effect of the same cause or independent causes. These statements may be independent causes without having any relationship. Read both the statements in each question and mark your answer as

Statements:

I. The local co-operative credit society has decided to stop giving loans to farmers with immediate effect.

II. A large number of credit society members have withdrawn major part of their deposits from the credit society.

  1. A.

    Statement I is the cause and statement II is its effect

  2. B.

    Statement II is the cause and statement I is its effect

  3. C.

    Both the statements I and II are independent causes

  4. D.

    Both the statements I and II are effects of independent causes

Show answer & explanation

Correct answer: B

Concept:

In a cause-and-effect reasoning question, one statement qualifies as the cause of the other only if it can, by itself, plausibly and directly bring about the situation described in the other statement. If neither statement can trigger the other on its own, they must instead be treated as effects of some separate unstated cause, or as two entirely unrelated facts.

Applying it here:

  1. One statement says the credit society decided to stop lending to farmers with immediate effect; the other says a large number of members had already withdrawn a major part of their deposits.

  2. A cooperative credit society lends out of the deposit pool its members maintain with it, so when a large number of members pull out a major share of those deposits, the funds available for fresh lending shrink sharply.

  3. That shortage of lendable funds is exactly what forces the society to halt loans, so the withdrawal of deposits directly and independently produces the decision to stop lending.

Cross-check against the other readings:

  • Reversing the direction (treating the lending decision as the trigger) does not work: a policy decision to stop loans has no mechanism that would make depositors go and withdraw their own savings.

  • Treating the two events as unrelated does not work either: a sharp change in the society's deposit base right before it halts lending is exactly the pattern of one event shaping the other, not a coincidence.

  • Assuming both are effects of some other, unstated cause is unnecessary here, since one of the two given statements is already a sufficient, direct trigger for the other.

So the withdrawal of deposits is the cause, and the decision to stop giving loans is its effect.

Explore the full course: Wipro Preparation